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© 2009 International Monetary Fund
June 2009IMF Country Report No. 09/
195
 [Month, Day], 201 August 2, 2001
Ireland: 2009 Article IV Consultation—Staff Report; and Public Information Notice onthe Executive Board Discussion
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions withmembers, usually every year. In the context of the 2009 Article IV consultation with Ireland, thefollowing documents have been released and are included in this package:
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The staff report for the 2009 Article IV consultation, prepared by a staff team of the IMF,following discussions that ended on May 1, 2009, with the officials of Ireland on economicdevelopments and policies.
 
Based on information available at the time of these discussions,the staff report was completed on May 20, 2009. The views expressed in the staff report arethose of the staff team and do not necessarily reflect the views of the Executive Board of theIMF.
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A Public Information Notice (PIN) summarizing the views of the Executive Board asexpressed during its June 15, 2009, discussion of the staff report that concluded the Article IVconsultation.The policy of publication of staff reports and other documents allows for the deletion of market-sensitiveinformation.
Copies of this report are available to the public fromInternational Monetary Fund
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Publication Services700 19
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Washington, D.C. 20431Telephone: (202) 623-7430
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Telefax: (202) 623-7201E-mail:publications@imf.org 
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Internet: http://www.imf.org
International Monetary FundWashington, D.C.
 
 
 
 
 
INTERNATIONAL MONETARY FUNDIRELAND
Staff Report for the 2009 Article IV Consultation
Prepared by the Staff Representatives for the 2009 Consultation with IrelandApproved by Ajai Chopra and Martin MühleisenMay 20, 2009
Executive SummaryGiven its serious internal imbalances, Ireland was especially vulnerable to the recentglobal shocks.
Overextension in construction and financial intermediation, along with loss of international competitiveness, has meant that the impact will be sizeable. Cumulatively, GDPis projected to contract by 13½ percent through 2010, the largest among advanced economies.Thereafter, as the present dislocations gradually correct themselves, only a modestly-pacedrecovery is foreseen. The incipient decline in wages will need to be sustained to help redressIreland’s cost disadvantage.
Rapid progress on bank restructuring is critical to reestablishing a healthy financialsector.
With banks facing liquidity pressures and sizeable losses, the authorities have takenimportant steps to stabilize the financial system—through the blanket guarantee to depositorsand creditors and the recapitalization of banks. ECB credit lines have provided valuableliquidity. The proposed National Asset Management Agency is potentially the rightmechanism to separate the good from the bad assets. Its success requires a comprehensiveand realistic assessment of impaired assets. The authorities’ efforts to press ahead withsupportive regulatory and supervisory measures will help manage the current stress and lower the risk of future crises.
Fiscal consolidation has begun—and requires a sustained effort.
The authorities’ sense of urgency is welcome. Such, however, has been the collapse of revenues that the 2009 deficitcould reach 12 percent of GDP. The authorities recognize that the execution of their ambitious consolidation plan will require a continuing commitment to address sensitiveexpenditures, including the public wage bill and the scope of social welfare programs. Theconsolidation will be more credible the more tightly it is tied to monitorable goals.
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